Correlation Between Direxion Daily and Pacer Benchmark
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Pacer Benchmark at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Direxion Daily and Pacer Benchmark into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily 20 and Pacer Benchmark Data, you can compare the effects of market volatilities on Direxion Daily and Pacer Benchmark and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Direxion Daily with a short position of Pacer Benchmark. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Pacer Benchmark.
Diversification Opportunities for Direxion Daily and Pacer Benchmark
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Direxion and Pacer is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily 20 and Pacer Benchmark Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Benchmark Data and Direxion Daily is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Direxion Daily 20 are associated (or correlated) with Pacer Benchmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Benchmark Data has no effect on the direction of Direxion Daily i.e., Direxion Daily and Pacer Benchmark go up and down completely randomly.
Pair Corralation between Direxion Daily and Pacer Benchmark
Considering the 90-day investment horizon Direxion Daily 20 is expected to generate 1.88 times more return on investment than Pacer Benchmark. However, Direxion Daily is 1.88 times more volatile than Pacer Benchmark Data. It trades about 0.58 of its potential returns per unit of risk. Pacer Benchmark Data is currently generating about -0.26 per unit of risk. If you would invest 3,254 in Direxion Daily 20 on October 9, 2024 and sell it today you would earn a total of 788.00 from holding Direxion Daily 20 or generate 24.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily 20 vs. Pacer Benchmark Data
Performance |
| Timeline |
| Direxion Daily 20 |
| Pacer Benchmark Data |
Direxion Daily and Pacer Benchmark Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Pacer Benchmark
The main advantage of trading using opposite Direxion Daily and Pacer Benchmark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Pacer Benchmark can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Pacer Benchmark will offset losses from the drop in Pacer Benchmark's long position.| Direxion Daily vs. Direxion Daily 7 10 | Direxion Daily vs. Direxion Daily 20 | Direxion Daily vs. Direxion Daily 7 10 | Direxion Daily vs. Direxion Daily MSCI |
| Pacer Benchmark vs. Pacer Benchmark Industrial | Pacer Benchmark vs. First Trust NASDAQ | Pacer Benchmark vs. Global X Internet | Pacer Benchmark vs. ProShares Online Retail |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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